Huh? First of all, size is the biggest advantage the iPhone has. You can stick it in a pocket, and have it anywhere. That's the breakthrough that smart phones represent ... that ubiquity. The snazziest laptop in the world is worth squat if it's not with you.
But secondly, the biggest obstacle to using the iPhone as a mobile device is the lack of text input. Almost any serious communication device requires either voice (e.g., the telephone) or typing. How do you send email? Or tweet? Or update your Facebook status? Ok, the iPhone has a virtual keyboard, but how useful is that?
True, the Apple tablet will undoubtedly present a much more impressive on-screen keyboard, but really, it's still just tapping your fingers on glass. Personally, I'd rather see a return of something like Palm's Graffiti ... I found that to be at least as fast as typing on a virtual keyboard, and you could hold the device in one hand and "write" with the other.
I give Apple generally high marks for its innovations, but I don't see how this tablet is going to win. It will have all the cumbersomeness (all the cumber?) of a laptop, combined with the limited input of an iPhone. Aside from displaying a really large mug of beer or a koi pond, what's the advantage?